Legislation Creates Study Committee on Taxation of Internet-based Software
SB2831 which passed in the Legislative session created the Taxation of Remote and Internet-Based Computer Software Products and Services Study Committee to examine and develop recommendations regarding the taxation of remote and internet-based computer products and services under the Mississippi Sales Tax Law and the Mississippi Use Tax Law.
In September 2021, the Mississippi Department of Revenue filed a proposed amendment to its sales tax regulations on Computer Equipment, Software, and Services. The amendment would have caused the deletion of the existing use tax rule which declares as nontaxable any software located on an out-of-state server when assessed via the internet and would consider as taxable many previously nontaxable internet-based services provided or hosted entirely outside Mississippi when utilized by a Mississippi user. The amendment would have also expanded the definition of computer software to include such items as cloud computing, software as service, platform as a service and infrastructure as a service. The amendment was set to go into effect on October 24, 2021. However, a public hearing was requested and held on November 3, 2021 where issues and questions arose.
This legislation requires the study committee to report to the Legislature no later than October 1, 2022, the committee’s findings and recommendations for which products and services should be taxable and the manner in which they should be taxed. The committee will be comprised of the Commissioner of MDOR, the CEO of the Mississippi Association of Realtors, the Executive Director of the Business and Industry Political Education Committee (BIPEC), the President of the Mississippi Manufacturers Association, and the President of the Mississippi Bankers Association, or their designees.